Brown under pressure on savings guarantee
- 00:02:04
- ITN
Brown under pressure on savings guarantee
Prime Minister Gordon Brown is coming under growing pressure to guarantee savers' deposits during the economic turmoil. Mr Brown's German counterpart Angela Merkel has stepped in to prevent a run on her country's banks as its second biggest mortgage lender teetered on the brink of bankruptcy. Ireland, Greece and Denmark are also protecting accounts fully while the UK has only agreed to extend protection from £35,000 to £50,000. The issue will be high on the agenda of the first meeting of the new National Economic Council in Whitehall, amid fears of an exodus of funds from British banks to foreign institutions enjoying state protection. Both Mr Brown and new Business Secretary Peter Mandelson have already voiced concern over the impact of the Irish move, and it is understood that Mrs Merkel gave no indication of her intention to follow suit when she met fellow EU leaders in Paris on Saturday to seek a co-ordinated approach to the turmoil in the banking sector. Meeting twice a week in the Cobra emergency briefing room in the Cabinet Office, the NEC will effectively work as Mr Brown's economic "war cabinet" for the course of the financial crisis. Chaired by Mr Brown, it will also include Chancellor Alistair Darling and other Cabinet ministers with economic responsibilities as well as Whitehall mandarins, with the aim of co-ordinating action across the Government. There is speculation that its first meeting will see consideration given to an emergency bail-out scheme under which the Treasury could give the banks billions of pounds in return for shares if the crisis worsens. The Chancellor said he was ready to take "some pretty big steps that we wouldn't take in ordinary times" in order to restore stability to the UK banking system. But he rejected suggestions that he should free the Bank of England from its duty to keep inflation in check, in order to permit a sharp reduction in interest rates.
ITN | October 6, 2008
